GBPUSD retests support level ahead of FOMC minutes

GBPUSD retests support level ahead of Wednesday's FOMC minutes. Will the bullish run from 1.196 continue?

November 20, 2019 | AtoZ Markets - The Cable broke above 1.29 last week after three days of consolidating below it. After the breakout, the currency pair continued upwards and almost hit the 1.3 critical psychological level. However, buyers started losing their grip on the pair and the bears pulled to retest 1.29. Geopolitical tensions and Brexit concern are the major risk factors for traders and investors. If there is a rebound at 1.29, we may see the Sterling continue upwards.

Brexit is the major focus for Cable traders. As such, the upcoming UK general election has dominated the headlines. Meanwhile, a debate ensued between UK PM Boris and opposition leader Corbyn on Tuesday.  Johnson reassured that the Brexit will be achieved on January 31, 2020. There were no dramas throughout the debate and the market stayed quiet.

Will the FOMC be the short-term driver?

Market volatility is quite low ahead of today's FOMC minutes. Since cutting the interest rates last month (3rd time in 2019), Fed Chair Powell and his colleagues have been talking at one event or the other. Powell addressed the Congress twice last week. He said that the rates are in a good position unless the current outlook suffers a ''material reassessment''. In today's minutes, the market is expecting an unchanged rates figures. However, Powell's tone will be watched closely as investors and analysts try to decipher what the Fed meant by 'material reassessment''.

GBPUSD Elliott wave analysis

Technically, the current price pattern supports further advancement above 1.3. The dip from 1.3017 completed a corrective zigzag pattern at 1.277 and the price followed with a rally to 1.298. We used the chart below in the last update. (All the charting tools used below are from TradingView)
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GBPUSD retests support level

The rally from 1.196 is completing an impulse wave. Wave (v) should hit 1.317 or extend further to 1.34 and above. Unless the price breaks below 1.27, the short-term bullish trend from 1.196 should continue.

1.29 is a confluence of three support levels (horizontal and diagonals) and thus very significant. If a fast dip happens below, wave (iv) could morph into a more complex corrective pattern. However, if the price surges from 1.29 and breaks above 1.3, wave (v) should continue to 1.317 and 1.342 target levels.

Read Also: GBPUSD Fundamental Analysis Post ITV Debate and FOMC Data

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